The World Trade Organization is forecasting global trade growth of 4.4 percent in 2018 after a 4.7 percent increase in 2017, the strongest performance in six years. Growth should fall within a range from 3.1 percent to 5.5 percent, the WTO states, although a continued escalation of trade-restrictive policies could lead to a significantly lower figure. The WTO is also projecting growth of 4.0 percent in 2019, below the average of 4.8 percent since 1990 but above the 3.0 percent average registered since the global economic crisis.
While risks to this forecast appeared to be more balanced than at any time since the financial crisis until recently, the WTO said, there are now signs that escalating trade tensions may already be affecting business confidence and investment decisions. Specifically, the increased use of restrictive trade policy measures and the uncertainty they bring to businesses and consumers could produce cycles of retaliation that would weigh heavily on global trade and output. Other risks include faster monetary tightening by central banks that could trigger fluctuations in exchange rates and capital flows that could be equally disruptive to trade flows, worsening geopolitical tensions that could reduce trade flows, and conflicts that could increasingly take the form of cyber-attacks, which could impact services trade as much or more than goods trade.
On the other hand, the WTO stated, there is some upside potential if structural reforms and more expansionary fiscal policy cause economic growth and trade to accelerate in the short run. The fact that all regions are experiencing upswings in trade and output at the same time could also make recovery more self-sustaining and increase the likelihood of positive outcomes.